Startup Decoupling and Reckoning

https://blog.eladgil.com/p/startup-decoupling-and-reckoning

by eladgil • 3 years ago

81 6 3 years ago

blog.eladgil.com

drx• 3 years ago

I hope startup founders read this and internalize it. Those who raised at 100x multiples and think "this will not happen to me" might be for a rude awakening a year from now.

myth_drannon• 3 years ago

Does this partially applies to corporations as well? All the moonshot projects or even just new non profitable projects will get cancelled for the same fundamental reasons - no cheap money.

metadat• 3 years ago

Successfully established businesses have a "real" income stream stemming from market activities, and aren't directly dependent on external "cheap money", except as a second-order derivative.

i.e. If the primary market you cater to is comprised of startups, then your business will also be affected by the crunch inasmuch as you're dependent on revenue from those [now dryer] markets.

Businesses who may not be substantially directly impacted can be expected to become more timid, cautious, and fearful in general. This can easily translate to re-focusing on things the organization has strong core domain expertise in and less on risky exploratory development.

shuckles• 3 years ago

Meta is an instructive example of how this might apply to large companies: those which show little income after frivolous expenses may see their valuation tank, impacting total employee compensation which depends on high prices. These companies may want to free up cash flow to spend on buybacks instead of moonshots, causing them to cut down projects.

However, they don't have a $0 in the bank account clock running like many startups may.

megaman8• 3 years ago

my interpretation of this is that the tech recession will take a long time to enter into and the winding down of tech is going to take several years at least.

ilrwbwrkhv• 3 years ago

There will be no winding down of tech.

Startup Decoupling and Reckoning

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